$300m ($45m) sen unsec cb coming tonight from JPM/BOA/WFC/DB. Terms: 5yr, 5.75-6.25% up 17.5-22.5%, div pctn > 35c. UOP = repay debt/gcp. invests in debt/equity of middle mkt co’s (portfolio = 40% 1st lien, 36% sub, balance equity & other). CP & revolver financing done @same time as Allied Capital acq in 2010. BBB/Ba1 rates. One convern is quality of portfolio > Allied acq. PF debt = 1.6B (~50% sec), EBITDA = 448m, lev 36x. CP line = L+275 & revolver L+300. Unsec 5yr CB, use L+500. High div stk = low vol so use 20%v. Theo = 102. Tricky sctr but given high coupon, high bond flr & IG rating, expect o/r interest. Not obv for hedgers but good risk/reward in slightly cheap IG bonds w/shrinking universe & o/r interest. Ask for mids but we’d buy
Business development company focused on debt & equity investments in private middle market US companies.
PF Cash $300m
PF Debt $1600m
LTM EBITDA $448m
LTM FCF -$791m
Leverage 3.6x
Mkt cap $3291m
ARCC invests in small private companies, primarily debt
Performed well during downturn & did not violate any credit line covenants. Acquired Allied in April 2010 at discount to book (they did not fair as well). Led to improved mkt pos & divers revenue, but concerns over addl write downs. Liquidity good with increased cash from recent trans & $675m avail on funding lines. ~50% of debt secured, paying L+300m on revolver.
Our assigned apread L+500